In an exclusive interview with The Pioneer, Vikram Pawah, president, BMW India tells Kushan Mitra that the carmaker expects to be ‘simply unstoppable’ in 2018 with all their brands for both cars and motorcycles. Excerpts:
BMW had an extremely successful presence at the Auto Expo 2018, does that underline your plans for the yearIJ
We had a record 2017 and we plan to live up to our slogan which is ‘simply unstoppable’ this year for BMW and Mini cars as well as BMW Motorrad (motorcycles). If you take BMW, we had record sales in 2017 and we have outlined our new product launches and new segment creation, in terms of new segment, we just launched the 6GT and we also launched several new models at the Auto Expo including the new X3 and M5 and we intend to grow the market further not just for BMW but for the industry. As for Mini we have plans to launch the ‘Made In India’ Mini Countryman later this year which we feel will take the Mini brand to new heights. As for Motorrad, it is still early days, as you know we just took over marketing the brand last year from our importer but we have some mid-market GS models planned for later this year the 850GS and the 750GS and later this year we shall the have locally manufactured 310GS and 310R. So to summarise, we launched seven products at the Auto Expo and showcased six more that we will be launching later this year. So I believe in 2018 we will be able to grow the market, and I say market because growing the market is our main focus. We have a clear aim of creating one new segment every year and this year we have launched the 6GT and we are announcing today that we will launch the X4 next year, which we feel will create an all-new segment.
last year, the government first cut the GST on luxury cars and then reversed that decision before adding additional cesses on luxury cars this budget. Do you believe this up and down impacts the consumerIJ
It is not at all good for the consumer, let us be clear about that. If you understand the automotive consumer you know that he or she does not buy a car overnight. The decision cycle takes between three months to a year and these rapid changes are not helpful from a customer angle at all I would say. What the industry and the customer first and foremost is consistency, but we will come back to that point later. Our priority is to protect the consumer, so when the government announced the rate cut at the end of May last year and even though the new GST rates would not have been applicable until July, we started selling cars under the reduced rates straight away, and didn’t make the customers wait till July because why would the customer wait to buy the product. Similarly, when in September when the rates went back up we did not increase the prices straight away. Right now as rates on CKD (Completely Knocked Down) have gone up, we have given a clear date, that is April 1 from when prices will head up, not ‘Until Stocks last’ as some of our competitors do, because we have to be transparent with our customers as this is a major purchase decision for them.
Coming back to the policy front, we are one of the few manufacturers with both four-wheelers and two-wheelers under our belt. For us, when I look at these two segments there is no consistency. In two-wheelers the parts cost has gone up but the import duty on completely built units is going down, in cars things are different. If the intention is ‘Make In India’, and let us be clear on one thing, India is a market for the future for all global manufacturers and I have already invested in India in manufacturing. But if the goal is full manufacturing that will happen only when sufficient demand is created and the way to create that is by creating a level playing field, not have a 100 percent differential in pricing. Have 20-30 percent difference, but not that high because that only restricts the choice of the consumer and pushes him or her to choose older technology which is cheaper.
And the opposite is happening in two-wheelersIJ
That will help create the market and that is the right approach. Bring the customs duty down, let the market get created and obviously the manufacturers will produce here.
vOnce you get to a particular volume thresholdIJ
Sure. You can localise components, engines, body-parts and you can make investments. The automotive industry is not a fly-by-night industry, it is a long gestation period industry.. You have to create capacities in advance and you have to make the most. If I invested in a paint-shop I have to run that for 24 hours to make it viable and the customer won’t pay for the additional cost of not running it.
Coming to shared mobility, BMW India tied up with Ola to offer luxury services. Do you believe there will be other luxury taxi services…
Firstly, I don’t like the word ‘taxi’, I believe this is a service. But you’re right, we did start a pilot in India for this shared mobility service but we feel it will take some time for the concept to get accepted and also on the luxury side it will take longer than with normal cars. We will try out some more things in the future as well, and you will hear about that soon and over the next five-ten years India will see more of a shared mobility concept coming in. But I do not feel that this will ‘replace’ the market but be more of an add-on.
What about car rental servicesIJ
Keep in mind that in India the concept of self-drive car rentals is still very new and nowhere near the levels it is in the developed world. There are some providers who are giving luxury car rentals in India but it is a very small market, however I am sure it will grow.
Coming to electric cars, the government has said that there is no need for an Electric Vehicle policy now. Do you feel the move towards low-emission and ultimately zero-emission vehicles is now unstoppableIJ
Progress is always unstoppable, in any field. When I look at the auto industry, cleaner, greener technologies are the future. I would say that it is more about the outcome than the technology. The outcome is that we need lesser emissions and fuel consumption. How that happens will need a policy framework and infrastructure development. From a macro perspective I believe the government should focus on two things - where to they want to go with emissions, do we want to merge with the world and how quickly we want to merge. The second is infrastructure, road infrastructure and charging infrastructure. If the government is focussing on these two things technology adoption will happen thanks to market forces as long as they incentivize ‘cleaner outcomes’ and ensuring there is the infrastructure for it, changes will happen.
But they are not doing that for hybrids which attract a high rate of taxation...
What they are trying to do is incentivize a particular type of technology solution which will be counter-production. Plug-In hybrids will emit 50-75 percent less than conventional vehicles. Take the i8 Roadster we displayed at the Auto Expo, it is a sportscar that can do 0-100 in 4.6 seconds but the fuel consumption is only 2.1 litres per 100 kilometers (48 kilometers per litre), and such vehicles will lead to the development of electric charging infrastructure throughout the country. It takes away range anxiety and technology anxiety. The i3 is the ultimate electric vehicle and it is one of the top-selling electric vehicles in the world, but that works once you have created the infrastructure. BMW sells 100,000 electric and hybrid vehicles every year, we are the leaders in the premium segment and we fully intend to bring in more of our hybrid vehicles to India but we hope the government looks at technology agnostic outcome-based incentives.